Cablevision Systems Corporation and Bresnan Broadband Holdings LLC petitioned the Federal Communications Commission on July 2, 2010, to merge and to transfer control of Bresnan Cablevision to Cablevision.  Bresnan has a 5-year, non-exclusive television franchise agreement with the City of Billings that was approved by the City Council in 2008 and extends to May 2013.  The franchise agreement gives the City the right to approve the transfer, as long as the city acts within 120 days of receipt of the transfer notice, or by Nov. 2, 2010.  If the Council does not act, the application is deemed to be approved.

Cablevision is a publicly traded Delaware Limited Liability Company (LLC) with headquarters in Bethpage, NY.  It reports that it serves about 3.1 million basic video subscribers in and around the New York City metropolitan area, making it the fifth largest cable operator in the United States, based on the number of subscribers.  It also owns interests in companies that produce and distribute national entertainment and regional news programming, telephone and high-speed Internet business services, the Newsday newspaper and Madison Square Garden.  Bresnan Communications also is a Delaware LLC with headquarters in Purchase, NY, that has holdings in Montana, Colorado, Utah and Wyoming.  In addition to providing cable, telephone and Internet services in Billings, it operates a call center that employs approximately 400 people.

The City Administrator, City Attorney and outside special counsel, Joseph Van Eaton of Miller and Van Eaton, PLLC,  of Washington, D.C., have engaged in extensive negotiations with Bresnan and Cablevision.  An audit and a financial review of the proposed Billings transfer also were conducted by Front Range Consulting, Inc., of Castle Rock, CO.  As a result, the following conditions of transfer tentatively were agreed to Oct. 15 by Bresnan and Cablevision:

• The City Council may, at its discretion, impose by resolution a 25-cent per month fee per subscriber solely for the use of Channel 7, in addition to the franchise fee currently being paid to the City.  This is a right the City currently has;
• Bresnan will pay $19,100 in 2007-09 franchise fees that the City questioned as a result of the audit;
• Channel 7 will go to High Definition television, with all line and equipment changes to be paid by Cablevision;
• Channel 8, the back-up channel for City programming, will become digital, with subscribers who need a box to convert the signal for older televisions to pay 99 cents a month for the box;
• Cablevision will extend "dark" business fiber lines to the Communications Center for 9-1-1 back-up of City-owned lines and to the Public Works Utilities Division at Belknap, where the City's GIS services are located;
• Cablevision will continue to upgrade/provide Internet and cable television services for the remainder of the franchise term without arguing inability to pay; and
• The franchise term will remain the same, with the City reserving the right to negotiate for other factors at its renewal.

Because the negotiations were so recently concluded, a resolution and transfer agreement still were being prepared by the parties the week of OCt. 18, and will be included in the Council Friday packet of Oct. 22, 2010.

The City Council may:

• Approve the resolution and agreement;
• Deny the resolution and agreement, and allow the transfer to take effect without action;
• Deny the resolution and agreement, and petition the FCC for an extension of approval of the transfer on the grounds the application submitted in July was not complete.

 

The Bresnan franchise agreement produced about $1.09 million to the City in Fiscal Year (FY) 2009 and $1.135 million in FY 2010.  That income level is expected to continue as long as the channel continues to grow or maintain its current level of service. 

The 25-cent per-month fee would raise about $7,500 monthly for Channel 7, based on 30,000 customers.  That revenue is intended to be in addition to the funding the City provides to the channel from franchise fees.

The cost of the audit and financial report of $5,750 is more than offset by the $19,100 in back franchise fees to be paid by Bresnan.

Based upon receipt of an appropriate resolution and transfer agreement, it is recommended that the City Council approve the transfer of the Billings cable television franchise from Bresnan to Cablevision.